Major indices finished the week at all-time highs, touching the edge of the weekly option implied move, and contracting implied volatility yet again.
For the new week, the S&P 500 Weekly Implied Move is + / - 30 points or 8.70%, with a range of 3122.89 and 3063.27.
The weekly bias and trend remains up.
The dramatic move in Treasuries, steepening of the Curve, and rapid Sector Performance changes bear monitoring.
This makes sense as rising interest rates are positive for Banks, Regional Banks, and Insurers; whereas, declining interest rates are favorable for REITS, Utilities, Homebuilders, and high yielding, dividend paying stocks.
Fedspeak stands out as a potential catalyst, along with other Economic Releases, Conferences, Earnings Releases, and the binary news shocks of Tweets, Trade and Impeachment.
Looking forward, conditions are favorable to continue the advance from Fed Policy and corporate buybacks; however, trade logic calls for filling in the price gaps and a move lower towards 3037 in the S&P 500. A move of that magnitude is 2x the weekly implied move and a confluence at the lower end of our pre-computed Level.
Just remember, if what we logically expect to happen doesn't occur, the opposite move is often more reactionary. Either way, low volatility begets higher volatility; therefore, it's time to begin anticipating higher volatility in the form of price (range) expansion.
Have a great week.
All the best,